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‘Rent by negotiation’

By Amanda Hugankis - 28 June 2010 33

I’m looking for a rental property through allhomes, and I keep coming across this – ‘rent by negotiation’.  Can anyone tell me how this works? 

I know it might sound like its obvious – but I’m wondering if there is more to it?  Is it essentially a rental auction?  Am I missing something?

What’s Your opinion?


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‘Rent by negotiation’
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essfer 3:43 pm 18 Aug 10

colourful sydney racing identity said :

essfer said :

I’ve never seen so many people pissed off by the opportunity to negotiate .

You must be a property owner. If you don’t realise why this is a bad thing you simply don’t understand it.

Far from it, I’m a renter.

Rental auctions are illegal in the ACT (and rightly so, it is simply taking advantage of those who can least afford it), and any agent caught inciting an auction can face heavy sanctions and/or fines. The legislation is in place to prevent unscrupulous owners and agents from taking advantage of an already tense situation.

We all know that the cost of renting in Canberra is painful enough without having agents/owners driving up the market value by “auctioning”. Right or wrong though this simply illustrates low supply and high demand – which is basically uncontrollable, and supply/demand is the cornerstone of a free capitalist market.

The examples I have provided though reflect a high supply and low demand.

With so many properties available in The apARTments the owners are offering ‘by negotiation’ not to railroad potential tenants, but to increase their chances of negotiating ANY tenancy (even below “market” value) before one of the other identical properties, thus minimising their loss through vacancy. If that is not indicative of high supply and low demand I’m not sure what is.

You’ve clearly missed my point entirely. Good work.

essfer said :

I’ve never seen so many people pissed off by the opportunity to negotiate .

You must be a property owner. If you don’t realise why this is a bad thing you simply don’t understand it.

essfer 2:21 pm 18 Aug 10

I’ve never seen so many people pissed off by the opportunity to negotiate. Don’t get me wrong, the auction that clownkiller described is abhorrent but I’m hoping these instances are so seldom as to make them insignificant.

Presently on allhomes there are 16 “by negotiation” rentals (hardly epidemic). Of these:

* 8 are not even through agents. Of the 8 that are, the majority are in the city in an overcrowded market (see below)

*10 are high end inner-city apartments, for which the market has recently been flooded with the settlement of the apARTments in Acton (of which there are at least 14 currently on the rental market at large)

* 9 are fully furnished properties, for which the market is diminished at this time of year, particularly under a caretaker government.

Given that ‘price by negotiation’ is usually only seen on more expensive properties this actually offers an opportunity to get the property for cheaper than it may have been advertised. The higher end of the rental market is considerably smaller than the middle/lower market, meaning the potential tenant has more bargaining power, hence the blatant request for a negotiated outcome.

And to all those landlords out there who’s agents don’t bother explaining rental increases and the CPI-based ‘fair increase’ formula – you need a new agent. Good property managers are our there, they’re just let down by the other idiots giving them a bad name.

essfer 2:00 pm 17 Aug 10

thehutch said :

1. No political will;
2. No funding or trained staff to investigate;
3. Difficult to prove in tribunal;
4. The community is more than willing to report alleged fraud, but never actually want to do so on the record or provide formal statements and go to court (why would you want to). It would be great if that didnt need to (why should they need to)… but no legislative powers that makes it easier to prove without this;
5. Ex-partners well renowned for making false allegations – very much a your word against there’s scenario – unless they’re stupid enough to leave a paper trail;
6. No political will.
7. Some (minority) people do get caught.
8. No political will.
9. Most Public Housing tenants do the right thing, the minority give everyone else a bad rep. Sadly this minority has been rorting the entire welfare ‘system’ for a long time and probably will into the future… used to piss me off – now i just realise that i work hard and will end up having a better life than someone who thinks they will get ahead by rorting the system. Karma comes and catches up with you eventually.[/quote>

Hutch: There is a common tone to your post that makes it sound like Housing ACT is either spineless or castrated by policy. I’d say a little from column A, a little from B.

Your points are spot on as always, but I think it’s also important to note that these people who continue to rort all welfare systems will find ways to do it regardless of what action is taken by the relevant authorities. True that Housing is a toothless tiger, but even if they had the ability to do anything about it the rorters would just circumvent it.

If only these leeches would put as much effort into their careers and lives as they do into wasting my tax spend, we’d have a near utopia.

Lastly, the Tribunal is just as much to blame for giving these tenants innumerable chances to try again. Or worse when they are proving a point to Housing in administative protocol. The whole system is written wrong.

Capital punishment for welfare fraud would probably be enough disinsentive, but I can’t see it happening.

Amanda Hugankis 11:14 pm 29 Jun 10

Sure Troll-sniffer, I do see ur point. But while I am luckily not in this position, I can see instances where the rental is for a family with kids, ur lease was up in 4 weeks 2 weeks ago & ur landlord said ‘no renewal’ as they want you out of the place you’ve been in for 4 years as they’re gonna sell/move in/pretend to renovate and up the price $85 a week. So you’ve got 2 weeks left to find something, you’re getting desperate and this is the first place that’s accepted your application, and the agent knows it. Do you turn it down out of fear you’re being manipulated and might end up paying more than what it’s worth? Or do you just find a way to squeeze another $80 a month out of the family budget so you can get your living situation settled?

I have no problem with trying to test the market for a property’s relative value – but I would personally like to see the process run fairly, with some transparency that would provide tenants with some level of assurity that they aren’t being exploited.

Again, I’m grateful I’m not in a vulnerable position.

troll-sniffer 6:35 pm 29 Jun 10

Still having trouble seeing a problem. You arrange to inspect the property, and based on what you see you put in an offer to pay say $560 per week for a 12 month lease.

Then you wait, same as fixed price rentals. If you get the place all is good, if you don’t it’s just the same as 99% of tenancy applications that don’t get accepted.

However if the agent calls you and says they’ve received an offer for $580 would you like to up your offer you terminate the deal on the spot even if they then come back and say you can have it.

Or am I missing something?

Amanda Hugankis 3:16 pm 29 Jun 10

Ok. Did a bit more investigation (Nancy Drew like). Phoned the agency about a particular apartment with the price listed as ‘by negotiation’, asked what it was all about. Its a 3 bedroom apartment at the top of a hill in an inner south suburb, with great views of the golf course & surrounds. The owners are looking for ‘offers’ around $600. I asked about the process – there is a spot on the form where you can write what you want to pay. So I ask ‘okay, so essentially, provided your references check out, it would most likely go to the highest bidder?’, and response was ‘basically, yep’.

So now we all know the story.

In response to those that ask about the difference between this and a house for sale/auction, well, there are rules about how these things are conducted – rules for good reason, and the the process is much more transparent. There must be something bad about it – most real estate institutes around Australia take the matter very seriously. It might be a practice reserved for those more elite properties right now, but in allowing it to happen, so could also become the thin edge of the wedge … eventually filtering downward into the lower realms of the rental market.

I believe that Blackshaw once tried to launch it as a more transparent practice, so that it was as fair as it could be (?) for all those wishing to participate. The way it is now just seems like you they could (do) manipulate the situation to their and the landlord’s ends.

BundahBoy 3:05 pm 29 Jun 10

Troll-sniffer: There’s a lot more to being a successful landlord/investor than simply seeking to maximise wealth.

I agree with you, Im actually hassling out the ACT Govt and stoopid land taxes.

georgesgenitals 2:32 pm 29 Jun 10

troll-sniffer said :

There’s a lot more to being a successful landlord/investor than simply seeking to maximise wealth.

Very true. I try to treat my tenants as ‘clients’, and find that by applying that principle, we establish a relationship where I take care of the tenant (sensible rent, property maintained, etc), and the tenant takes care of the property and pays rent as agreed.

So far it has worked very well.

troll-sniffer 2:19 pm 29 Jun 10

BundahBoy said :

georgesgenitals and troll-sniffer:

…when the ACT Govt jacked up the UCV on my house by over 140k last year my land tax and rates went up with it. I needed to put the rent up to pay the extra debt and my agent said that it wasnt allowed. Maybe just her rules?

You are only allowed to put the rent up once per calendar year on a rental property. That is probably what your agent was trying to convey. In addition, a rental increase after the twelve months must be reasonable. That provides a certain level of security for a tenant. An opportunity exists at change of tenant and lease to reset the rent if it has fallen behind market rents, and in your financial planning allowances should have been made for all sorts of contingencies such as interest rates, guvmnt charges etc.

I see you mention that you use an agent. A wise move if you can afford it, but if ends aren’t being met, manage your property yourself and save close to 10% of your valuable income. When good times return, employ an agent again.

My tenant recently rang me to let me know the lease was about to end and did I want to increase the rent. I said no, as she’s a perfect tenant, perfect payment record, never rings me about frivolous matters etc. So she’s currently on an effective discount of maybe 15% against full market rent, however the unit is occupied and there’s no risk of losing a swag of rent to a bolter as happened last time I let an agent manage my property.

There’s a lot more to being a successful landlord/investor than simply seeking to maximise wealth.

georgesgenitals 2:15 pm 29 Jun 10

BundahBoy said :

georgesgenitals and troll-sniffer:

Unfortunately I cant supply a link however when the ACT Govt jacked up the UCV on my house by over 140k last year my land tax and rates went up with it. I needed to put the rent up to pay the extra debt and my agent said that it wasnt allowed. Maybe just her rules? In keeping with haveing as little to do with the ACT Govt as possible I didnt investigate, or care.

Anyways this is missing the point of my argument. YES: UCV raise, land tax raise, rents go up. Simple. I was mearly making an argument that if tenants were better informed of taxes they may be able to understand why rents have been rising of late. Also that the Govt should review the land tax to multiple property owners rather than the ‘everyday Canberrans’ they say they are trying to protect.

Thanks for clarifying. I think you may have been breaching the maximum rent increase rule, which is Rent*(CPI+(CPI*10%)) per year. Of course, when you get a new tenant, you can set the rent at whatever the market will bear. To my mind, the tenant won’t care much about your costs anyway (you are, after all, an evil rich landlord – BWAHAHA).

Completely understand your rationale, though, and it sounds like your heart is in the right place.

astrojax 1:41 pm 29 Jun 10

I would imagine that most decent property managers (if that’s not a tautology)

actually, ck, it is more an oxymoron… 😉

BundahBoy 12:34 pm 29 Jun 10

georgesgenitals and troll-sniffer:

Unfortunately I cant supply a link however when the ACT Govt jacked up the UCV on my house by over 140k last year my land tax and rates went up with it. I needed to put the rent up to pay the extra debt and my agent said that it wasnt allowed. Maybe just her rules? In keeping with haveing as little to do with the ACT Govt as possible I didnt investigate, or care.

Anyways this is missing the point of my argument. YES: UCV raise, land tax raise, rents go up. Simple. I was mearly making an argument that if tenants were better informed of taxes they may be able to understand why rents have been rising of late. Also that the Govt should review the land tax to multiple property owners rather than the ‘everyday Canberrans’ they say they are trying to protect.

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